Sometimes people run out of collateral to offer to the banks in lieu of loans in the market. The most commonly accepted and easily granted are homes. The owner's homes is always the most preferred form of collateral when it comes to applying for long term secured loans from the larger banks in the market. There are loans in the market which usually only accept traditional forms of collateral like some sort of property such as land or building. But now the person can also offer their cars as a form of collateral as well. Such loans against cars are now a common form of loan in the market.
Such sources of credit are mostly accepted in a much more time efficient manner then other options in the market. Also what happens with such loans is that the individual will get the amount which is mostly less than the actual value of their vehicle. But the banks at least give the loan in the form of a secured loan which helps the user get a much lower rate on interest then other such financial instruments on offer in the market. This helps reduce the chances of applicant not paying the loan on time as now the actual debt amount will be marginally smaller. Also the loan would be a less expensive option for the individual as with secured loan the processing charges are lower as well as the charges which are charged against the loan owner's account when it comes to not paying the loan on time.
Also with the loan against cars the bank can seize the car and sell it of in the open market in a much faster manner then when they have to sell some kind of property in the market. Thus the bank can recover their funds much faster in such kind of secured loans.